Pitney Bowes (PBI)

Effect of Change of Control

Awards under the 2007 Plan are generally subject to special provisions upon the occurrence of a “change of control” transaction with respect to the company. A “change of control” is defined as:

• the acquisition of 20 percent or more of the company’s common stock or 20 percent or more of the combined voting power of the company’s voting securities by an individual, entity or group;
• the replacement of a majority of the board other than by approval of the incumbent board;
• the consummation of a reorganization, merger, or consolidation where greater than 50% of the company’s common stock and voting power changes hands; or
• the approval by stockholders of the liquidation or dissolution of the company.

Previously, under the Pitney Bowes 2002 Stock Plan approved by stockholders in 2002, upon a change of control, awards were vested whether or not the participant was terminated (a “single trigger” vesting provision). Under the 2007 Plan, any outstanding stock options, SARs or other equity awards under the 2007 Plan will generally become fully vested and exercisable, and, in certain cases, paid to the participant only if upon or within two years following a change of control there occurs a “triggering event” (as defined in the Senior Executive Severance Policy) with respect to the employment of the participant. A triggering event is defined generally to include a termination of employment by the company other than for cause, a termination of employment by the participant following a reduction in position, pay or other constructive termination event, or a failure by the successor company to assume or continue the outstanding awards under the 2007 Plan.